Hu Jie Visits Huobi’s Influencer Lecture Hall: The Fed’s Policy Logic Is Changing, and Bitcoin Faces a New Macro Test
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Hu Jie Visits Huobi’s Influencer Lecture Hall: The Fed’s Policy Logic Is Changing, and Bitcoin Faces a New Macro Test
Global financial markets may be standing at the beginning of a new monetary policy cycle.
Navigating Web3 tides with focused insightsOn June 25, Hu Jie, former senior economist at the Federal Reserve and professor at Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University, appeared as a guest speaker on Huobi’s “Industry Leader Lecture Series” (Episode 4), delivering a talk titled “From Wall Street to Web3: How Will the Fed’s New Chair Reshape Global Financial Markets?” The session systematically covered key topics including the evolution of the Federal Reserve’s monetary policy paradigm, global liquidity cycles, the correlation between U.S. equities and Bitcoin, and U.S. digital asset regulation.
Hu Jie emphasized that understanding future market trends requires looking beyond interest rate hikes or cuts—what matters more is whether the Fed’s underlying monetary policy paradigm is undergoing transformation, which will become a critical variable for global asset pricing over the coming years.
Fed Policy Paradigm Shift: A Key Driver Behind the Global Asset Bull Market Over the Past 18 Years
Hu Jie noted that to understand today’s global capital markets, one must first grasp the fundamental shift in the Fed’s monetary policy following the 2008 financial crisis. He explained that the sustained rally in U.S. equities and global risk assets over the past 18 years stems not only from improved corporate earnings or technological innovation—but more importantly, from a profound change in the Fed’s monetary policy paradigm.
“A significant portion of the bull market in U.S. equities and other financial markets post-2008 resulted from the Fed switching its monetary policy paradigm—relying more heavily on base money issuance to manage monetary supply. This paradigm shift has had far-reaching implications—not only for U.S. equities but also for Web3 assets like Bitcoin.”
Hu Jie further explained that quantitative easing did not significantly drive up long-term inflation, yet it altered the distribution structure of base money within the financial system—channeling massive liquidity into asset markets.
New Fed Chair May Drive Another Monetary Policy Shift
Regarding the market’s focus on incoming Fed Chair Kevin Warsh, Hu Jie highlighted his strong preference for reducing reliance on the balance sheet—suggesting the Fed may revert to an interest-rate–centric policy framework.
“Clearly, with the new chair taking office this year, a paradigm shift is imminent. One of the most important actions will be balance sheet reduction—i.e., shrinking base money supply.”
However, he cautioned that implementing the new policy won’t happen overnight. With ongoing geopolitical risks, volatile energy prices, and uncertain inflation trajectories, the Fed must prioritize market stability—making the pace of balance sheet reduction more cautious. “Balance sheet reduction is highly likely to resume—but pacing is crucial. If managed well, it need not trigger severe negative effects.”
Liquidity Remains a Critical Variable Influencing Bitcoin
On the Web3 market, Hu Jie observed that Bitcoin is becoming increasingly embedded in the global financial system, with its price performance closely tied to global liquidity. Over the past decade, Bitcoin’s price has shown a strong positive correlation with the Nasdaq Composite Index—reaching as high as 77%. In the long term, Bitcoin responds to macroeconomic drivers similar to traditional tech stocks—especially liquidity.
He stressed that balance sheet reduction does not necessarily signal an immediate end to the bull market—but does mean asset markets will lose the persistent liquidity support they’ve enjoyed over the past decade.
“Balance sheet reduction, as a standalone factor, is undoubtedly negative for any asset market—including U.S. equities and Bitcoin. But it isn’t the sole factor. AI advancement, robust fundamentals, and market sentiment may continue supporting asset prices.”
For investors, he advised focusing less on daily rate-cut expectations—and more on long-term shifts in global liquidity. “Liquidity remains the ammunition. Among all factors influencing asset prices, liquidity is clearly a particularly critical one.”
Tokenization of U.S. Equities Will Accelerate Integration Between Wall Street and Web3
Addressing the recent surge in tokenized U.S. equities, Hu Jie viewed it as a significant manifestation of deep integration between traditional finance and Web3.
“The boundary is certainly blurring. Wall Street is entering Web3—and Web3 is increasingly interlocking with Wall Street. This is an inevitable trend.”
He noted that, in the short term, tokenized equities may divert some capital away from crypto markets—but their long-term significance lies in opening channels for traditional capital to flow into on-chain markets.
Still, he cautioned that Real World Assets (RWA) enhance transaction efficiency—not intrinsic asset value. “Don’t assume wrapping a poor-quality asset with RWA suddenly makes it a good one. Quality assets remain quality assets; inferior ones remain inferior.”
U.S. Digital Asset Legislation Sets a Global Benchmark
In closing, Hu Jie offered a detailed analysis of the U.S. digital asset regulatory legislation currently under development.
He predicted the CLARITY Act would pass—and soon, most likely this year. He added that the U.S.’s institutional development around digital assets not only signals its formal adoption of a global digital finance competitiveness strategy but also provides vital reference points for digital asset regulatory practice worldwide—including in China.
Hu Jie concluded that the trajectory of digital finance is now unmistakably clear: major economies globally will continue exploring novel pathways for integrating digital assets with traditional finance—and U.S. institutional progress will further accelerate this process.
As a long-term knowledge-sharing initiative launched by Huobi HTX, the “Huobi HTX Industry Leader Lecture Series” consistently invites authoritative experts from global finance, technology, and Web3 domains to deliver in-depth talks on cutting-edge topics—including macroeconomics, digital finance, AI, and blockchain—to help users build a more systematic market understanding and seize long-term investment opportunities amid a complex and rapidly evolving global financial landscape.
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